Executive Summary

New Zealand milk production figures provided by Dairy Companies Association of New Zealand (DCANZ) were recently updated with values spanning through Nov ’21. Highlights from the updated report include:

• New Zealand milk production volumes declined 1.5% on a YOY basis throughout Nov ’21, reaching a five year low seasonal level. The YOY decline in New Zealand milk production volumes was the fourth experienced in a row.
• Fonterra’s ’21-’22 farmgate milk price forecast of $8.40-$9.00/kgMS is currently 15.4% above the seven year high level experienced throughout the previous season at the midpoint of the forecast and is on pace to reach a record high level.
• New Zealand cow & heifer slaughter rates declined 12.4% on a YOY basis throughout Nov ’21 when normalizing for slaughter days, reaching a three year low seasonal level.

Additional Report Details

Milk Production

According to Dairy Companies Association of New Zealand (DCANZ), Nov ’21 New Zealand milk production volumes declined seasonally from the 12 month high level experienced throughout the previous month while finishing 1.5% below previous year levels. New Zealand milk production volumes reached a five year low seasonal level for the month of November. On a milk-solids basis, production declined 1.2% YOY, also reaching a five year low seasonal level.

The Nov ’21 YOY decline in New Zealand milk production volumes was the fourth experienced in a row but the smallest experienced throughout the four month period. New Zealand milk production volumes had finished above previous year levels over eight consecutive months through Jul ’21, prior to declining on a YOY basis over the four most recent months of available data.

‘20-’21 annual New Zealand milk production volumes increased by 3.0% on a YOY basis, reaching a record high annual level. The 3.0% annual growth rate was the largest experienced throughout the past seven years. ‘21-’22 YTD New Zealand milk production volumes have declined by 2.9% on a YOY basis throughout the first half of the production season, however, and is pace to reach a four year low level.

Rainfall & Soil Moisture Deficits

New Zealand rainfall levels declined to a four year low seasonal level throughout Nov ’21 when regionally weighted by milk production volumes. Rainfall levels finished 47.0% below previous year levels and 9.4% below 20 year average seasonal levels for the month of November.

New Zealand soil moisture deficits finished slightly above previous year levels for the first time in the past 11 months throughout Nov ’21 when regionally weighted by milk production volumes. Soil moisture deficits finished 0.6% above previous year levels but remained 13.7% below 20 year average seasonal levels for the month of November.

The cold, wet spring weather has contributed to the recent declines in New Zealand milk production volumes. According to the USDA, producers are hopeful that current soil moisture may carry pastures further into the Southern Hemisphere summer months.

Farmgate Milk Prices

Fonterra’s final ’20-’21 farmgate milk price of $7.54/kgMS reached a seven year high level on strong Chinese and Southeast Asian powder demand. Fonterra raised their ’21-’22 farmgate milk price forecast to a value of $8.40-$9.00/kgMS in early Dec ’21, up $0.30/kgMS, or 3.6%, at the midpoint of the forecast. The midpoint of the ’21-’22 farmgate milk price forecast is currently 15.4% above previous year levels and is on pace to reach a record high level.

Cow & Heifer Slaughter

New Zealand cow & heifer slaughter rates declined 12.4% on a YOY basis throughout Nov ’21 when normalizing for slaughter days, reaching a three year low seasonal level. The YOY decline in New Zealand cow & heifer rates was the first experienced throughout the past four months and the largest experienced throughout the past two and a half years on a percentage basis. Nov ’21 dairy cow & heifer slaughter, which has more limited historical data available, finished 23.0% below previous year levels.

’20-’21 annual New Zealand cow & heifer slaughter finished 4.0% above the previous year, reaching a five year high level and the third highest annual figure on record. ’21-’22 YTD New Zealand cow & heifer slaughter rates have increased by an additional 1.4% throughout the first half of the production season and are on pace to reach a record high annual level, despite the most recent decline.

New Zealand milk production volumes increased at a compound annual growth rate of 4.2% over the ten year period ending during the ’14-’15 record production season but growth has moderated over more recent years as farmgate milk prices declined from the ’13-’14 record high levels and the New Zealand milk cow herd was reduced. USDA is projecting the New Zealand milk cow herd will decline 0.5% on a YOY basis throughout the 2022 calendar year, reaching a five year low level.